Twitter posted its first earnings report card as a public company Wednesday, and we were there listening to the conference call.

The company’s stock has more than doubled since its IPO in October, leaving it with a market capitalization of more than $36 billion. But investors are clearly jittery about the company’s ability to grow its user base, and the meager 3.8% sequential growth wasn’t enough. Some analysts believe the company is overvalued, but the valuation is likely tied more to Twitter’s long-term potential in mobile advertising than current earnings.

Thanks for stopping by our live blog of Twitter’s earnings. This is their first quarterly report to Wall Street. Analysts on average are expecting the company to report a loss of 2 cents per share. Revenue is expected to be $217.82 million, up 94% from a year ago.

As we wrote earlier today, one of the top things analysts are going to look for is user growth. Twitter has acknowledged it needs to keep growing its user base, which is currently less than one-fifth the size of Facebook.

The bulk of Twitter’s users are also outside the U.S., a confounding problem considering overseas revenue only represents about a one-fourth of overall revenue. Twitter has responded by adding staff in places like Singapore, South Korea and Australia, so it will be interesting to see if those moves are beginning to bear fruit.

The company is also offering a projection of its first quarter revenue, saying it will be in the range of $230 million to $240 million. Analysts on average are expecting $214.55, according to Thomson Reuters.

For year, Twitter says it expects revenue between $1.15 billion and $1.2 billion. That’s higher than the $1.13 billion expected by analysts.

Yoree Koh has our first hit on the numbers, and notes that the user growth slowdown was the fourth consecutive quarter it’s happened. “The growth rate slowed from 6.4% in the third quarter and 6.8% in the second,” she writes.

An interesting tidbit to consider: Twitter’s 3.8% sequential user growth was bigger than Facebook, which counted a 3.4% sequential rise in monthly active users for its fourth quarter results last month. Of course, the difference between the companies comes down to scale. Facebook has 1.23 billion (with a “B”) monthly active users, while Twitter has 241 million (with an “M”) monthly active users.

(The image you see above is Facebook’s MAUs. Notice the Facebook shade of blue.)

Costolo notes more than 5.4 million Tweets written about Nelson Mandela. Millions also apparently Tweeted about the world cup drawings. “When events happen, the event itself and conversations surrounding the event unfold on Twitter,” Costolo says.

Costolo talking about user growth. “We are confident about our ability to continue to scale revenue,” Costolo says. Even as the company maintain “the industry’s strictest ad load” likely meaning the company doesn’t want to overburden customers with ads.

Costolo says Twitter is working on easier ways to help people sign up on mobile devices, and also to encourage people to come back if they’re inactive. He believes this will help the “slope” of customer growth, but may impact the “timeline views” metric we mentioned earlier in this live blog.

Twitter is rolling out new ad products, Costolo says. New self-serve ads have been received well. Also notes targeting services. “These initiatives are just beginning, but already off to a great start,” he says.

There’s still a lot that can be done to “improve the user experience,” Costolo says. The changes being planned will make the service more satisfying “in the first few days, weeks and then months and years on Twitter,” he says.

Gupta says Black Friday and Cyber Monday were rather big for Twitter. “Advertisers are increasingly recognizing conversations on Twitter provide a valuable opportunity to connect with consumers in real time and in Q4 we saw a record number of retailers flock to Twitter to do just that,” he says.

He reminds us that the company’s positioned for growth, and promises to make the product easy to use while preserving the experience core users (like me!) enjoy. I’m sure Apple, Yahoo and Facebook all believed the same thing before their respective backlashes over product redesigns.

First question: Analyst asks what slowed growth rates for the quarter. Also wants to know what’s happened so far in January.

Costolo says up until last year, “growth has been viral and organic.” “Growth was something that happened to us,” he says. Now, he says, the company is working on the “flywheel” of increased user interaction. (Notice how intelligently he avoided the direct question?)

Costolo says he believes everything Twitter’s doing will make the product reach everyone. “We simply need to make Twitter a better Twitter.”

Costolo says the company is pushing how to make Twitter better for private conversations. He mentions how Twitter is like a town square and, “You often want to whisper next to you about the thing you’re both observing.” He’s going have the company work on that. Is Twitter working on a Snapchat competitor? I’ll leave it to all of you to make the Carlos Danger jokes.

Second Question: User Growth (Déjà vu!) To be fair, the analyst does apologize for “beating a dead horse.” Asks if the changes Twitter is making might be hurting user growth.

Costolo the company can test experiments quickly and analyze them. He also suggests that the changes aren’t being tested all at once on users. He doesn’t believe that the tests hurt customer growth. He also says Twitter is actively trying to make people interact with the product more. Thank goodness they’re not trying to drive them away.

Now an analyst asks about the growth of timeline views (remember, they fell sequentially).

Costolo reminds us that timeline views are one measure of engagement. “It is absolutely the case that the volume of interactions per time line view was something we were hoping to drive with the things that we – capabilities we launched in Q4,” he says.

Costolo reminds us that commerce happens all the time on Twitter. Some of those activities are ones that Twitter has gotten involved in (such as its partnership with AmEx). He says the company doesn’t have any current plans or timelines (no pun probably intended) to announce right now.

First question from the Twitter stream: How do you balance monetization and user experience.

Gupta basically says he believes the company can handle it. He believes the ads the company serves are relevant. “I would remind you then that was also driven by the fact that we had increased demand in the strong Q4 shopping season here from our advertisers and so the — we are very cognizant of balancing it,” he adds.

Costolo says the company has a “very, very clear” roadmap to help people understand Twitter more quickly. He notes that because of the increased interactions in Q4 that the company experienced, he believes the “slope” of the growth curve will change. When? He doesn’t know. But one of the reasons Twitter invested heavily in infrastructure, Costolo says, was to allow for this type of testing.

Analyst follows up asking essentially about churn of users.

Costolo says he won’t speak to that, but he notes there is a “massive global awareness of Twitter.” He says the company needs to close the gap between awareness and usage. Repeats need for people to “get it” quickly. This means the first moment, the first day. “This is absolutely a focus area for us,” he adds.

Analyst asks more details about ads, and how much can be done with the Twitter app vs. other niche products (like Vine).

Gupta says advertisers have gone from “why advertise on Twitter?” to how to do it effectively. He said advertisers like the ROIs they see. As the targeting and advertising capabilities improve, advertisers have better experiences. When Twitter is integrated into an ad, they are more successful, he ads. Cites studies from WPP and Nielsen.

On whether there need to be multiple apps, Costolo says he believes Twitter is the best product for real-time interaction and discovery. “Users see us as the place to go for real-time in-the-moment conversation and discovery,” he says.

He’s getting off on a tangent again, but he’s now talking about how the service is the place for breaking news, etc.

Given that perspective, Costolo says he doesn’t “have any particular religion” about whether or not there should be use-case-based apps.

Comments (5 of 7)

What the… TWTR is down from its exorbitant valuation?? Hard to imagine a quarterly loss of $511M from a company that chalked up revenues of $243M (beating analysts estimates!?); and why projected revenues for next quarter of only $230M to $240M – my math says that is a decrease in revenue, quarter over quarter? Stock is down nearly $12/share after the close: I wonder how much farther it drops between now and Feb 15th, when insiders are allowed to cash out – greatly diluting this stock. I guess it’s time for me to take my gains now and sell, long before it hits $30 or $32/share, as many of the analysts predict.

5:30 pm February 5, 2014

hundoman wrote:

These dotcom 2.0 market valuations are just nuts. Twitter losses widened to $511.5 million in the current quarter while it added only 9 million active users a month from the last Q3 2013 results as it's Monthly Active User (MAU’s) growth rate is slowing.

Twitter only expects revenue for the whole year of $1.2 billion but yet it’s still a company worth $36 billion in market capitalization and it has never made a dime of profit? Nuts.

Twitter employee stock lockout period ends March 5th .. get ready to see some people spending money on cars, houses, and other stuff.

5:14 pm February 5, 2014

Mark wrote:

Costolo working hard to put "lipstick on a...."

4:53 pm February 5, 2014

Bill wrote:

With Twitter, it may not be ultimately about the sheer number of users, but the amount of activity they generate. Would be interesting to see avg. no of posts, favorites, RTs per user...better measure of engagement.

4:30 pm February 5, 2014

Dave wrote:

Revenue is up but it still isn't generating a profit. My guess is that the competition for advertising dollars is also going to weigh on some of the other internet stocks--particularly Facebook and Google--though it may take some time until investors realize what's happening. It may even cut into TV, radio, and newspaper advertising. Let's face it, you only need so much advertising.